The Ethereum community has been divided on how best to respond to the threat of protocol-level transaction censorship in the wake of US government sanctions on Tornado Cash-linked addresses..
Over the past week, members of the Ethereum community have proposed social slashing or even a user-activated soft fork (UASF) as potential responses to transaction-level censorship on Ethereum.; some have called it a “cheat” that will do more harm than good, but others claim that it is necessary to provide “credible neutrality and censorship resistance properties” in Ethereum.
The heated debate comes after Ethereum miner Ethermine decided not to process transactions from the now US-sanctioned Ethereum-based privacy tool Tornado Cash, leading members of the Ethereum community to worry about what would happen if other centralized validators did the same.
The Ethereum community is also discussing the effectiveness of social slashing in combating censorship on the Ethereum network., since the strategy could lead to a division of the chain; some validators might process transactions on the chain without censorship and the others validate only the OFAC-compliant chain.
Social slashing is the process by which validators see their stake reduced by a percentage if they fail to properly validate incoming transactions or act dishonestly.
This may become a major issue if regulators require that major centralized staking servicessuch as Coinbase and other large centralized pools, which collectively stake more than 50% of Ether (ETH) on the Ethereum Beacon 2.0 chain, only validate strings that are OFAC compliant.
The founder of Cyber Capital, Justin Bons, holds that slashing “is a trap” that “poses a greater risk than OFAC regulation” and will not be a viable solution to address censorship at the protocol level.
1/21) We are now at a critical crossroads for Ethereum
With OFAC regulation looming over ETH; threatening censorship
However, the greatest threat comes from within
Discussions of “social slashing,” multiple forks & unclear governance
Heralds the potential for disaster in ETH:
— Justin Bons (@Justin_Bons) August 22, 2022
1/21) We are at a critical crossroads for Ethereum. OFAC regulation looms over ETH; threatens censorship. However, the biggest threat comes from within. Debates about “social slashing”, multiple forks, and unclear governance… all of this heralds the potential disaster at ETH:
In a 21-part Twitter thread on Monday, Bons said social slash exchanges can “deprive innocent users of their deposits,” which would “violate their proprietary rights.”.
Bons also said that too many validators complying with law enforcement on Ethereum “would lead to a chain split”, at the point where “censors start to ignore or not attest to blocks containing OFAC violating TXs”.
The founder of the Ethereum podcast The Daily Gwei, Anthony Sassano wrote on Twitter on Saturday that “collateral damage is inevitable in social slashing. […] worth it to protect Ethereum’s credible neutrality and censorship resistance properties”.
That’s a less bearish outcome than the Ethereum network engaging in permanent censorship.
Collateral damage is inevitable with social slashing – but at some point it’s worth it to protect Ethereum’s credible neutrality and censorship-resistance properties.
— sassal.eth (@sassal0x) August 20, 2022
That is a less bearish outcome than the Ethereum network engaging in permanent censorship. Collateral damage is inevitable with social slashing, but at some point it pays off to protect Ethereum’s credible neutrality and censorship resistance properties.
Meanwhile, the developer of Geth, Marius Van Der Wijgen, shared a similar sentiment stating that preserving censorship in the Ethereum network should be the top priority of the Ethereum community.:
“If we allow censorship of user transactions on the network, we have basically failed. This is *the* hill I’m willing to die on.”
“If we start allowing users to be censored on Ethereum, none of this makes sense and I will leave the ecosystem. […] I think censorship resistance is the highest goal of Ethereum and the blockchain space in general, so if we commit to that, there’s not much else to do, in my opinion,” he added..
the crypto researcher Eric Wall added that, to date, censorship resistance has served as a core property on the Ethereum network and that while we are seeing some censorship on the front end, “it will only get bad if censorship starts.” to happen on the Ethereum side itself”.
The Tornado Cash censorship debacle has plagued the Ethereum community for over a week.
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